SAN FRANCISCO ( TheStreet) -- Chip giant Intel ( INTC - Get Report) is claiming a major breakthrough in chip design with the launch of 3-D transistors, which will debut next year in a new 22-nanometer processor dubbed Ivy Bridge.

The transistors, which Intel is heralding as its most significant technology announcement of the year, come at a time when the number one chipmaker is under increasing pressure from ARM Holdings' ( ARMH) low-power technology.
Intel is claiming a breakthrough in processor design with its new 3-D transistors.

"We're going to be able to provide better performance and lower power at the same time," said Bill Holt, general manager of Intel's technology and manufacturing group, during a press conference. "We have been working on this for the last 10 years - we will be making upgrades to our factories over this year and next year to have them ramp up this technology."

Transistors, which are microscopic switches, have typically been flat structures on the surface of processors. Intel, however, has built tiny silicon fins which jut out from the transistors, a technology it is calling '3-D Tri-Gate'. This will boost the transfer of electric current across processors and also improve the density of transistors on chips, according to the tech giant.

The 3-D transistors are a key component of the company's push into ultra-dense 22-nanometer chips. A nanometer is equivalent to one billionth of a meter, and refers to the distance between the different processor components. Intel's highest density chips are currently 32 nanometers.

Running at low voltage, the 22-nanometer chips can offer a 37% performance increase compared to Intel's 32-nanometer offerings, the company said. The 22 nanometer silicon also uses 50% less power than its predecessor.

Intel gave a brief glimpse of its first 22-nanometer chip, Ivy Bridge, during Wednesday's press conference, demoing the processor running in a laptop, server and desktop computer.

Dadi Perlmutter, Intel's executive vice president, however, said that Ivy Bridge will first appear on a server next year. "We're going to get it ready for manufacturing and we will put that on the shelf next year," he added.

With investors keen to see Intel expand its processors further into the mobile market, Perlmutter was asked when the 3-D transistors will appear on 22-nanometer chips inside smartphones and tablets. "We have a date, but we're not going to talk about it ," he replied.

The Intel executive is nonetheless confident of the technology's ability to challenge ARM, which is enjoying great popularity in the mobile space. "I think we're going to be extremely competitive against what ARM can do," he said, in response to another question.

Intel shares rose 37 cents, or 1.59%, to $23.42 on Wednesday, despite a modest decline in tech stocks that saw the Nasdaq slip 0.52%.

--Written by James Rogers in New York.

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